Progressive Corp. plans to factor the impact of new tariffs on imports from Canada, Mexico, and China into its rate filings once data reflects their effect, according to president and chief executive officer Tricia Griffith.
This could occur as early as the second half of 2025, Griffith said during an earnings conference call.
“Typically, tariffs are a one-sided risk to our loss costs. We’ve been thinking about that a lot,” she said. Her comments followed President Donald Trump’s decision to impose 25% tariffs on imports from Mexico and Canada—including 10% on Canadian energy—and to double last month’s tariff on Chinese products to 20%.
The affected countries are the United States’ three largest trading partners, according to a report from AM Best.
Progressive’s pricing and economics teams are analyzing the potential impact of the tariffs, which would ultimately be reflected in pricing. The situation is evolving, but the company believes it has an estimate of the percentage impact from various tariffs, Griffith said. “It will depend on the countries, the products, the magnitude of severity” and could change, she said.
Uncertainties remain regarding how much of the tariffs will be passed from automobile manufacturers to consumers and how they will affect the cost of auto repair parts, as many originate from Mexico and Canada, Griffith said.
Ford Motor Co. CEO Jim Farley recently warned that a 25% tariff on imports from Mexico and Canada “will blow a hole in the U.S. industry that we have never seen... to have that kind of size of tariff would be devastating.”
The tariffs could have broad effects on the insurance industry, Griffith said. Tariffs on oil could lead to higher gas prices, potentially reducing driving and lowering auto claims frequency. At the same time, federal immigration policies could contribute to a shortage of skilled labor in auto repair shops.
In property insurance, tariffs on Canadian lumber could impact homeowners’ claims.
According to the Canadian government, 70% of production from its $10 billion softwood lumber industry is exported, with the United States importing more than half. Overall, about 80% of US softwood lumber imports come from Canada. Softwood lumber is widely used in home construction.
Griffith said the tariffs could also present commercial insurance opportunities if they lead to business expansion, though any such impact would take time to materialize.
Progressive reported a 19% increase in fourth-quarter net income to $2.36 billion. The combined ratio stood at 87.9 at the end of the fourth quarter, compared to 88.7 a year earlier. Net premiums written rose 20% to approximately $18.1 billion.
The growth in policies was led by personal lines, driven by higher personal auto application volumes. This increase was attributed to greater advertising spending, the removal of temporary non-rate actions from 2023, and Progressive’s agent compensation program.
Personal auto rates increased 3% in 2024, compared to a 19% increase in 2023. Griffith said rates rose in some states while declining in others. Meanwhile, the underwriting profit margin for personal lines increased to 11.4% from 5.9% the previous year. Personal auto claims frequency declined, while severity remained stable in 2024.
In contrast, personal property rates rose 19% nationwide last year, with further increases expected in 2025. Progressive is restricting new homeowners and renters policies primarily to customers bundling them with another policy.
The company has exited the non-primary dwelling and fire policies market in 34 states, tightened policy terms and conditions, and increased deductibles as part of its risk management strategy, Griffith said.
